00:00The S&P 500 and the Nasdaq advance on Monday as artificial intelligence-related deal-making boosted investor sentiment,
00:08even as the US government shutdown extended through its sixth day.
00:13The Nasdaq and the S&P 500 reached record closing highs, while the blue chip Dow inched lower.
00:21Chips took the lead after AMD said it would supply AI chips to open AI in a deal that could generate tens of billions of dollars in yearly revenue
00:29and would allow the CHPT creator to buy a stake of up to 10% in the chipmaker.
00:34AMD surged, pushing the broader Philadelphia Semiconductor Index higher.
00:39The federal government remained shuttered for the sixth day as lawmakers idle in a partisan impasse.
00:44The shutdown has postponed the release of key economic indicators, forcing investors to rely on secondary, non-government data
00:51to gauge the timing and extent of Federal Reserve interest rate cuts.
00:55Monetary policymakers have cautioned against rushing to lower the federal fund's target rate
01:00as inflation remains high, while others believe signs of softness in the labour market merit rate cuts.
01:06Financial markets have priced in an all-but-certain 94.6% chance of a 25-basis-point interest rate reduction
01:14at the conclusion of the Fed's October meeting.
01:17Without new U.S. government data this week, market participants are monitoring reports
01:22on outstanding consumer credit, mortgage demand, and the University of Michigan's preliminary take
01:28on October consumer sentiment.
01:29Next week, third-quarter earnings will provide market catalysts as the reporting season gets underway
01:35with results from large U.S. banks.
01:38Well, the government remains shut down, and the market remains unconcerned with the government being shut down.
01:44And perhaps, historically, there's a precedent for sharing that view.
01:49As historically, markets have performed relatively well when the government has shut down.
01:54And in this case, I do think there is reason to have that optimism.
02:00Historically, the average length of a government shutdown has been eight days.
02:04The median length has been around four days.
02:07And the longest respective shutdown took place, ironically enough, during the first Trump administration
02:13when Democrats and Republicans were going back and forth about funding the border wall between U.S. and Mexico.
02:20That shutdown lasted 35 days.
02:23Why is that number important?
02:25Well, from October 1st, if you take it out 35 days, that brings us to the next Federal Reserve meeting,
02:32which is scheduled to take place between October 28th and October 29th.
02:37Now, I don't know if this particular shutdown will last that long.
02:41But if it does, I think that all but assures another interest rate cut from the Federal Reserve of 25 basis points.
Comments